tv First Business FOX December 4, 2012 4:00am-4:30am PST
called fiscal cliff. plus, options for foreclosed homeowners. new hope even if you've been kicked out of the house. how airlines are hatching ways to sock you with fees. and, what tech stock is on the chopping block from one money manager's portfolio. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's tuesday, december 4th. i'm angela miles. in today's first look: as mixed messages come out of washington on the budget, stocks tumbled yessterday. oracle is among the latest corporations trying to beat the clock on next year's expected tax increase. oracle's board has approved accelerated dividend payments for the second, third and 4th quarters of next year. nhl owners and players plan to
meet today in a renewed effort to move the puck on labor talks. let's see what's going on with the market today with matt shapiro, president of mws capital. good morning to you. > > good morning angie. > this is certainly one moody market. it seems to move on every word that comes out of washington. > > absolutely. actually, i am surprised, given the stalemate that we had this weekend and the gop yesterday having a counter offer - they are miles apart, but the market really held in there, and i think, at this point, the market is just basically pricing in that nothing really good is going to happen in washington, at least for now. > what about manufacturing matt? the numbers came in solid for china, not so good for the u.s. there was a bit of a slip. > > i think some of that is the
concern. but at least the silver lining is positive for china. but realize, china is $8 trillion. our market is about twice the size. so we really need those manufacturing numbers to kick in next year. but of course there have been so many good confidence and housing numbers to sort of buttress that weaker number yesterday. > what is your stock strategy in the current market? > > i think the big question everyone has to ask themselves is, do i need microsoft, cisco, and intel in my portfolio? they have been laggards for years. microsoft at least has been paying some good dividends. it's kind of appreciated somewhat over the past couple of years. but you know, that pc market is not really happening; it's all the tablets and the smartphones. so, you have to ask yourself, next year, do i keep these stocks in my portfolio? so many people own them. > yes or no? what is the answer? > > i am going to give them another year, but intel is
really on the chopping block, despite the fact it pays such a good yield. but we just have to see what the business trends are going to be in the first quarter. > thank you matt. have a good one. > > thank you. in our cover story, house republicans' counter-offer in fiscal cliff negotiations with president obama takes away a white house argument that the republicans have no plan and puts medicare on the table for discussion. the republican counter-offer would raise $800 billion through tax reform and cut $600 billion from federal health programs, including raising medicare eligibility, another $600 billion cut from mandatory and discretionary spending, and factor inflation less in calculating social security benefits. "what we're putting forth is a credible plan that deserves serious consideration by the white house." in a three-page letter to the president calling democratic gains in the senate and mr.
obama's victory a "status quo election," the republican proposal would raise half the amount as the president's plan and save $350 billion from medicare and medicaid. however, at the chicago fed, a gathering of 39 individuals from banking and manufacturing industries - including automakers and other sectors - say the economy is strong enough - barely - to withstand either party's direction. "the vast majority think the fiscal cliff's impact will not be enough to drive us to recessionary measures." the chicago fed forecasts the economy will grow at 2.3% next year; unemployment will drop to 7.6%; new housing starts, often a key indicator, will increase to 950,000 new units; and vehicle sales will get a boost - all good news for the midwest. "with 13% of the population, we produce 30% of the vehicles. forecast is for 3.5% growth, which is 15 million units." also, the fed's economic forecasters say by the end of
2013, the price of west texas crude oil will rise about $4 higher than it is now. so overall, a gradual improvement - not fast enough or robust enough to greatly affect the jobs picture, but nothing on the horizon to reverse it, either. in the corporate race against china, the u.s. is gaining ground at a quicker clip. apple and exxon are among the american heavyweights moving up on the global 500 list of largest corporations. american companies now comprise roughly a third of the global list, and the market share is growing. a new study finds many low-wage workers are employed by some of the richest companies in the nation. the national employment law project finds that 2/3 of workers earning less than $10 an hour are employed by large corporations with net incomes in the billions. the study ranked corporations by the largest low-wage workforce and the companies' profitability.
walmart topped the list with 1.4 million employees and income near 15.7 billion. the company has been scrutinized for low wages and poor insurance benefits. other companies topping the list were yum brands, mcdonald's, target and sears. u.s. car sales are back on track after hurricane sandy disrupted the pace. dealership showrooms are busy again with people forced to buy cars demolished by the storm, and consumers are feeling more confident about the economy. at ford, sales were up 6.5%. gm reported a 3.4% hike in sales, while at chrysler, a 14% boost was reported. joe wiesenfelder of cars.com says due to superstorm sandy, the numbers may continue to roll in positive for months to come. "some of what we are seeing is probably deferred purchases in november from that period of the storm itself. gains were also reported among foriegn brands like toyota, where sales were up 17%. the automaker continues to recover
from last year's devastating tsunami. a deal may be taking flight between virgin atlantic and delta. reuters reports that singapore airlines is planning to sell its 49% stake in virgin atlantic. sources say delta could be stepping in to buy, which would give delta access to virgin atlantic's hub at london's heathrow airport. due to heathrow's high volume of flights, many airlines are interested in acquiring space there. the bank at the center of the worldwide interest rate rigging scandal is in talks to reach a settlement. switerzland's largest bank, ubs, may wind up paying a record fine of more than $450 million for allegedly manipulating the libor. libor has to do with the interest rates banks charge each other for borrowing costs. regulators from around the globe are said to be questioning financial firms such as jpmorgan chase, citigroup and hsbc in connection with the libor rate fixing scandal. trying to limit damage from the
phone hacking scandal that engulfed his news of the world paper, rupert murdoch is speeding through the split-up of his media empire. in june, murdoch announced that news corporation would split into two, separating publishing assets from the more lucrative film and television arm of the business. news corp. announced additional deatils of the split this week, including the shuttering of the daily, a tablet-only publication that has struggled to find a foothold in the marketplace. a major deal is happening in the dairy industry. in an attempt to milk more from the u.s. market, canada's largest dairy processor, saputo, is buying the morningstar unit of dean foods for $1.45 billion. morningstar's products include creamers, ice cream and cottage cheese. dean foods, the largest dairy producer in the u.s., based in dallas, is in downsizing mode. the deal with saputo is expected to close at the end of the year. the mayor of newark, new jersey is about to go on a strict diet. starting today, cory booker will live on food stamps for a week - that means spending
only $4 a day for all of his food. booker accepted the challenge in a twitter debate with a north carolina woman. other public officials have tried this before booker and have reported it to be a great challenge. there's no place like home for the holidays, and keeping up with its annual tradtion, fannie mae and freddie mac won't evict familes facing foreclosure during the holiday season. this year's freddie/fannie evicition-free dates are dec. 19 through january 2nd. you might think airlines wouldn't be able to find ways to add more fees to your ticket, but that's exactly what was talked about at the airline information conference that just wrapped up in san diego. airlines are reportedly looking at ways to use past passenger preferences as a way to customize add-ons for future travel. airlines collected $36.1 billion in extra fees this year. still to come, how you may be able to get your house back, even if it's already in
one-time world dominance here to other nations while we pursue the sexy growth areas of i.t. but not so fast, say the authors of the book, "producing prosperity: why america needs a manufacturing renaisance." one of the authors is willy shee. he's a professor at harvard business school. professor, you say we need to reverse this trend because manufacturing is crucial to our economic future - make the case for that. > > bill, i think the issue is that the ability to make things underlies your ability to innovate. our studies have shown that in many fields, if you can't produce the product, it really inhibits your ability to innovate into future growth areas. and we all know the importance of innovation to the future growth of the country. > is this happening then with, you might say, business and government complicity or ignorance, not realizing how important this is to our overall economy?
> > one of the dilemmas that we find is that companies will often let go of capabilities because they say, "oh, this isn't important to my particular industry today." but then, that capability turns out to be important to other industries. and when those other industries need that in the future, it's like an industrial commons as we describe it. those other industries don't have access to it because the capabilities have withered away. > > that is interesting, because the united states is obviously known as a major center of innovation. so, what do we need to do to get back into making manufacturing a prominent part of our economy again? > > one of the things we tell businesses they have to do is really invest in capabilities, and make competing on capabilities a more important part of your strategy. that means getting people to understand how your capabilities are deployed and how they are developed in the company and involved in your strategy. we think government has a role as well in terms of investing in some of those long- range basic science and basic
research areas, which support all of these innovations as a platform, if you will. government investment in basic science for example, in biotechnology and genomics, has created a whole new growth industry where the u.s. is the world leader. those are examples where the government and industry together both can do things which help build our economic future. > the book holds some fascinating insights. "producing prosperity" it is called. willy shee, one of the authors. thank you so much. > > thank you bill. still ahead, rebuilding the housing market by fixing the foreclosure crisis. an update is coming up next.
when we decided to update ourselves on the foreclosure process in america, we didn't have to search very far. chicago ranks 3rd in the nation compared to other cities. by state, it's california, michigan, texas, and georgia leading the way with the most completed foreclosures this year. joining us on set this morning is mary jones. she is the executive director agora community services. good morning to you. > > good morning. thank you for having me. > absolutely. we were hoping you could give us a sense of what is happening with people out there who are underwater still with their homes or facing foreclosures. how are they doing? > > they are not doing very
well, and it is sad; however, there are opportunities to bring a recovery to those homeowners. one of them is the independent foreclosure review. that is a process where the federal reserve board has determined that between january 2009 and december 31st, 2010, there were foreclosures that should never have even happened. so, our job, or the dilemma that we are having, is getting the word out to those homeowners that may have left their homes and still are struggling, but they have an opportunity under the independent foreclosure review to either get their homes back even, or have compensation. so we want that information to get to those individuals even though they are not in their homes. > because time is of the essence. if it is by the end of the year, you have to report that in. how are the banks doing? are they behaving better?
> > yes they are, and they are actually working to get this independent foreclosure review out there. we are working with some of the banks, and we see that they are trying, but there is still a lot more to do. > are you still seeing a lot of scams out there? > > we are seeing a lot of scams, a lot of things on the radio and television. it's because it's a free world, but we have to know that the borrowers and homeowners are able to get to the right places to get the right information so that they don't get caught up in scams. > so the best solution at this point is what? just to fix the red tape in this situation? > > yes. we would need to have the banks definitely streamline the modification processes. they shouldn't have 12 departments to go through. if the housing counselors that are hud-approved are having an issue - and they certainly are - getting to the right department, we know the borrowers are as well. > so people facing foreclosure should definitely contact hud, whether you are in the home now or out of the home, correct? > > yes. > any kind of foreclosure issue.
> > the home preservation, and there is a website that they can go to for the independent foreclosure revue, which they should do immediately, it is independent foreclosure review.com. > mary jones is executive director of agora community services. thanks for coming on the show today. > > thank you for having me. just ahead: the election is over, but the coal play lives on. signs one coal stock is heating up next, in chart talk.
coal stocks were all the rage during the presidential campaign. now that the election is over, it might not be over for one coal company. scott bauer of trading advantage joins us now for a closer look at a coal stock. good morning to you. > > good morning angie. > what are you seeing in walter energy? > > this one is really sticking out. the stock has basically halved this year, from $60-ish down to $30. just recently - end of last week, yesterday - we saw a monstrous, monstrous call buying for this particular stock in the $30 and $32.50 lines, not just for december monthly expiration, which is
still about three weeks out, but even on the weeklies. just a tremendous amount of call buying. so, is it someone just trying to take a position where the stock has halved this year? or, is it possibly in play a little bit? don't know, but it is definitely sticking out on the watch list. > did the stock mostly tumble because it was conventional wisdom that if governor romney was in the white house that was a plus for coal stocks, and a negative if it was president obama? > > i think you saw that across the board in that sector, though i will say that wlt really started falling much before the election, much before november, and then just kind of an accelerated down to this $30 level. > we have been talking about china in the show today, and it turns out that yum! brands is actually kind of a china play out there. > > it really is. > what do you see in the charts for yum! brands? > > yum! brands is almost a
bellwether or the benchmark for that sector in china. in fact, yum!, almost 50% of their revenues and profits come from china. they just lowered their guidance. just a few days ago they lowered their guidance going in for next year. is it just a slowdown for the macro china economy, or is it really just specific to yum!? we saw yum! really top out last week around that $72, $73 level, and it backed off almost 10%. it's trading around $67, which was somewhat of a support. it has tried to rally off that, but not with much success. i really would look for $62.50 as the next big support line. at $62.50, if you look at all the fundamentals with yum!, that may be a point to try and get back in and dip your toes in the water a bit. > good to have you on the show. that is scott bauer of trading advantage. > > thank you angie. that's it for today. we hope you will join us tomorrow for a sneak peek into stocks you might want to own in the new year. from all of us at first business news, have a great day!
have been working overnight to fix it, we will tell you what you need to know. i don't know what to do. >> people are hit hard by the weekend storm continue to pick up the pieces, we will let you know when more rain is on the way and how hard it is expected to hit. there could be a lot of naked people in san francisco today. it is all ahead on the ktvu channel 2 morning news. good morning everybody, it is tuesday, december 4th, i am brian flores. rain is moving in. >> it is a much weaker system. >> yes, cloudy skies, we do have temperatures much warmer than this time yesterday but that's not the case. you can see our satellite